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IHS weighs in on smart home deals

LONDON—IHS Markit sees disruption in the professional smart home market; Blake Kozak, IHS’ principal analyst, smart home and security technology, talked with Security Systems News about recent smart home deals and what they mean for the industry.

Comcast’s acquisition will help the company better control the experience as it expands its smart home business. “It just shows that they’re wanting to put more behind it; it’s not just a side product for them in addition to their other offerings as a telecom. … It proves that they see this smart home and connected home as more of a long-term project,” Kozak told SSN.

“IHS Markit estimates that Comcast represented about 2 percent of the American residential remote monitoring market, valued at about $13 billion in 2016,” read a recent report from Kozak and Anna Sliwon, IHS Markit analyst.

How will the Comcast deal impact the industry? “I think it’s going to put even more pressure on the traditional security providers,” he said, predicting that more consumers could see a benefit of having many systems on one platform with Comcast.

Kozak doesn’t expect Alarm.com’s acquisition to be “world-ending for everybody, because … we’re only at 23 percent penetration.”

The report noted that Alarm.com and Honeywell remain well positioned in the smart home market. “I think that they’re just going to continue to focus a lot on existing customers for the time being, but what needs to happen, though, is finding ways to reach the person that doesn’t have any sort of connection, any sort of security, monitoring or home automation,” Kozak said.

“Connected alarm systems for residential applications are forecast to grow at a CAGR of 18 percent, reaching $7.2 billion in 2020,” the report noted.

IHS predicts a changing focus in the industry; whereas intruder alarm dealers traditionally focused on hardware, they will now begin a stronger focus on software and platforms.

“In the end, it’s going to shift away from the hardware and more toward the back end,” Kozak said. “Prices are only going to come down, and eventually, all of this hardware is going to be commoditized. So, really, the differentiation is going to be on the integrations, how well the devices work together—and to what end; will it be for energy savings or security or all of the above?”

Dealers focusing more on the software and platforms could lead the industry to increased penetration beyond the current ceiling of about 23 percent of homes. “There needs to be more ease of use for the consumer … even how the products interact obviously is incredibly important,” Kozak said.

While Alarm.com’s acquisition of ObjectVideo—announced March 14—will mostly be focused on the commercial space, it could have some impact on the connected home space, Kozak said. “Video analytics could potentially help in not only the automation aspect but obviously security as well, adding an additional layer.”